Wednesday, June 24, 2009

Appraisals and How They Can Impact a Sale or Refinancing

Real Estate appraisals are becoming major obstacles for many people trying to sell or refinance their homes in the U.S.

When housing prices were going through the roof, appraisers were often called back by buyers or sellers for a revision of an appraisal to provide a value to justify a higher agreed-upon sale price. Lenders who were burned by huge losses from defaults have now tightened up their guidelines for appraisals. In some cases lenders are not accepting sales closed more than three months ago rather than the six-month window generally used in the past.

Valuation disputes are also causing problems in some sales. Sellers who have put higher prices on their homes and have buyers willing to pay are finding that the properties do not appraise for the sales price. One solution might be for the seller to pay more of a down payment or they may want to renegotiate the purchase price.

Appraisers are also bringing in values that are too low to allow homeowners to refinance their loans. Credit lines that are secured by homes are being affected. If your line of credit was based on a value that was 50% higher than today's value, a lender may scale back your total line of credit. Some borrowers are receiving notices from their lender saying their credit limit has been reached or exceeded based on a new appraisal.

While these changes are designed to prevent abuses, they also are adding more frustration to an already difficult real estate market. Whether you are a buyer or a seller, make sure your Real Estate agent is reputable and looking out for your interests.

For all your real estate questions or if you are considering buying or selling a house this year, give me a call at (401) 457-1745 or drop me a line!